Mortgage Fee & Cashback

Hutchy96

Our mortgage comes with a £995 fee and £1,000 cashback upon completion. I asked for the fee to be added to the loan, but I'm aware that you should make an overpayment to clear it as soon as the mortgage kicks in, to avoid paying interest on it.

The mortgage is a 2 year fixed deal at 2.02%, 90% LTV and is being used to purchase a new build with 2 Help to Buy ISAs.

The idea is to stay in the house for 2 years then sell up, or possibly stay some time after that with a re-mortgage.

However, should we use the cashback to pay off the fee which has been added to the loan, or should we pocket the cashback and use it towards purchases for the new house? - Given we will be selling up at the end of the fixed deal or remortgaging anyway.

My calculations seem to suggest it would only add a few £ to the monthly payments every month and pocketing the £1,000 would be the wisest option?


Thanks